Kenya in 2020: Prepare for interesting times

Thursday, January 9, 2020 22:00

By DENNIS KABAARA

It is only the first full week of 2020, yet we are already experiencing what the Chinese call “living in interesting times”. On the political front, open rebellion and discord within the Jubilee administration. On the micro and small business front, a new turnover tax which the media pointedly refers to as the “patriotism tax”.

Much economic opinion is predicting a tough year of job losses and growing unemployment, muted private sector investment, higher costs and lower standards of living at the family and individual level and a state of economic melancholy across the country. Economic malady equals social uncertainty and unrest.

Don’t also forget the fiscal fears around fast rising current debt service and likely increased borrowing requirements if expected revenue falls short in a “low economy-bad spending” environment despite promises of expenditure austerity, debt restructuring and overall fiscal consolidation. Remember too, that we now don’t have interest rate caps, so any government borrowing will be more costly (and lucrative to/for banks).

It isn’t promising. And that’s before recent third quarter Kenya National Bureau of Statistic data showing slower GDP growth in 2019 against 2018.

With the war on graft in a “twilight zone” somewhere between noisy arrests and zero convictions, our political class is deliberately focusing media on the Building Bridges Initiative (BBI) and possible referendum.

Expect many column-inches of raucous debate on an expanded national executive as the answer to divisive elections.

Kenyans might usefully reflect on the full BBI report. Here are a few “appetising” illustrations. On national ethos, a National Historian to compile our official history. On responsibilities and rights, a “charter of citizen responsibilities” (and a parenting curriculum).

On ethnic antagonism and competition, the thought that all public boarding secondary schools must draw half of their students from outside the county in which the schools are based. On inclusivity, the idea of an official Public Participation Rapporteur (and minimisation of the power of cartels).

On shared prosperity, an economic revolution for the youth; broadened tax base with lower tax rates; and no more wasteful and duplicated public spending on one hand, and tax holidays on the other.

On corruption, a Kenya free of cartel capture, money-laundering bankers and all bureaucrats responsible for disasters. On devolution, a “patient’s bill of rights” in healthcare. On safety and security, a new focus on food and medicine.

This is some of the BBI brainstorming that might, but won’t, inform public consultation in 2020. Only the politics will. The reality is that BBI is beginning to remind us of one of former US President Ronald Reagan’s great aphorisms, to wit, “governments have a tendency not to solve problems, only to rearrange them”.

What of the “Big Four”? In a more focused, Article 43 constitutionally aware context, this could have been a first, not second, term high-level agenda for this administration.

Today, with multiple emergency budget reallocations to national “Big Four” interventions for what is a county agenda, another Reagan axiom springs to mind — “the (nine) most terrifying words in the English language are: I’m from the government and I’m here to help”.

Having created their own “movie”, our leaders plead for solutions, not complaints, with effectively two years left. Even as the macroeconomy runs amok, we’re still doing unreformed post-independence microeconomics; given largely glacial change over time in regulatory and competition policy around SME-level sectors, clusters and industries, as well as SME-friendly local economic development that should be less about paper-based ease of doing business and more about its cost in practice. Before we even talk digital economy.

Recalling Nobel Economic Laureate Paul Krugman’s adage that a country is not a company, yet now forced to repair Kenya as one would fix an ailing corporate, we arrive at 2020’s real storylines. Do we have the fiscal space to do a stimulus, as the private sector demands? Will austerity on the cost side, including debt restructuring, happen? With a 2022 legacy in mind, will mega-project investments, and “Big Four” persist? Are we headed for an IMF programme? Will the anti-graft war bear fruit? Or is this a 2016 moment, when our fiscus last went haywire?

As management thinker Peter Drucker once noted, “the greatest danger in times of turbulence is not the turbulence, it is to act with yesterday’s logic”.

As former UK Prime Minister Winston Churchill might have added “however beautiful the strategy, you should occasionally look at the results”. As Chinese philosopher Confucius may have concluded “When a country is well governed, poverty and a mean condition are something to be ashamed of. When a country is ill governed, riches and honours are something to be ashamed of”.